Co-op Group enjoys sales boost as remaining 1% stake in Co-op Bank is sold off

The Co-op Group has enjoyed a rise in sales on the back of its British-sourced food, as it reported it had sold off its remaining 1pc stake in the troubled Co-op Bank.

The retailer recorded a 3.5pc rise in like-for-like food sales in the 26 weeks to July 1, helped by a 6pc rise in comparable sales of British meat.

The Co-op says it is the only UK supermarket to use British meat in all of its sandwiches and pork pies, and sells only British-reared bacon and lamb. It also reported a 22pc rise in sales of its premium ‘Irresistible’ range.

The strong performance helped the group achieve its 14th consecutive quarter of like-for-like growth in food sales. These sales only compare shops open for more than a year; on a total basis, food sales fell 1.2pc to £3.48bn after accounting for the disposal of 298 stores to rival chain McColl’s.

At group level, including the Co-op’s funeralcare and insurance divisions, the company reported flat revenues of £4.6bn in the first half.

Pre-tax profits climbed to £25m from £17m last year. The Co-op said it had been helped by one-off gains as well as a strong comparison with the prior year, when it took a heavy writedown on its stake in the Co-op Bank. On an underlying basis, profits fell 48pc to £14m.

Since the half year’s end, the Co-op has received a £5m boost from the sale of its remaining stake in the Co-op Bank. Its ownership had plummeted to around 20pc in 2013 after the bank was rescued by a group of hedge funds following the discovery of a £1.5bn hole in its accounts. Another recapitalisation earlier this year meant that the Co-op’s stake dropped to just 1pc.

The Co-op said its deal with the Bank to promote its services to its members would “naturally fall away and come to a formal end in 2020”. Nonetheless the Co-op Bank is expected to retain its name and wants to continue to promote ethical banking policies.

Steve Murrells, who became Co-op chief executive earlier this year, said the company’s businesses had continued to perform in the face of “challenging markets”.

“Since we launched our member reward scheme in September 2016 more than 1.1m people have signed up to join the Co-op,” he said. “As a result we’ve been able to give £35m back to our members and their communities over the first half of this year, a conscious decision to share our success with our members and the 4,000 good causes which mean so much to them.”

Last month the Co-op confirmed it was in exclusive talks to take over wholesale and convenience group Nisa for £140m.